GLG buys chunk of Melbourne's Armadale retail strip for $25m
Melbourne-based developer and investor GLG Group, controlled by the Langer family, has paid around $25 million to buy a huge chunk of the High Street retail strip in Armadale in the city’s inner south east.
The developer, which in March paid $41 million for another massive inner city site in South Melbourne, snapped up the 2400 square metre site with 80 metres of frontage and more than a dozen shops running from 1167-1193 Highs Street in an off-market deal with a local family trading as Anaria Investments.
The deal, believed to have been struck on a yield well under 4 per cent, continues the strong push by investors into retail strip property, despite sluggish retail trading conditions, the arrival in Australian of Amazon and high suburban retail vacancy rates of around 8 per cent.
Wealthy families like the Blooms (founders of Portmans) and the Kirbys (founders of Village Roadshow) have sold tens of millions of dollars of retail strip properties recently on very tight yields as investors continue to favour bricks-and-mortar retail despite the numerous headwinds.
High Street, Armadale, noted for its boutique stores, cafes and bridal shops, is one of Melbourne’s better performing retail strips with the vacancy rate falling to 3.9 per cent in July from 6.4 per cent a year ago, according to a Knight Frank report. About 15 clothing retailers including luxury brands Zimmermann and Bianca Spencer have taken up space on the strip in the past 12 months.
GLG director Campbell Blennerhassett told The Australian Financial Review the company had bought the site because it was a “magnificent piece of land in the middle of Armadale”.
“It’s a very competitive market at the moment. Good properties are selling at good values. We made an approach to the owner because we like strategic landholdings.”
With long term leases in place, Mr Blennerhassett said the fully-leased acquisition was a “passive investment” but with the potential for development over the long term.
“It’s a beautiful parcel of land in a great location. In our view you can’t replace those pieces of land. Retail continues to have different challenges, but the good retailers are continuing to reinvent themselves,” he said.
Earlier this CBRE sold the Mossgreen auction rooms on High Street, Armadale, for $10 million. Selling agent Rorey James said the strip had witnessed significant capital appreciation in recent times, supported by strong growth in the median house price.
“The Mossgreen building, had previously sold for close to $5 million only a few years earlier, with its value almost doubling in that time,” he added.
The strip acquired by GLG is fully leased to tenants that include an architect, a lighting shop and a piano shop on terms of between five and eight years.
GLG, whose other projects include a proposed $35 million Aldi-anchored retail precinct in Mount Gambier in South Australia, may look to refurbish the Armadale shops.
